BY ADEOLU ADESANYA
I got an email this week, the first line of the message read ‘Do you know anyone rich?’ The friend was sourcing for funding for his business, and I guess he had gotten to desperate stage, although I was sympathetic, I found it absolutely hilarious. I called him, and he told me that was how the founders of Innocent Drinks were able to secure their capital. I knew Richard Reed was a co-founder, so I decided to profile him and tell his story.
Richard quit his job at an advertising agency as an account manager where he worked for four years and with two of his friends Jon Wright and Adam Balon in 1999 founded Innocent Drinks, a smoothie and healthy snacks firm in the UK. In 2010 Coca-Cola acquired 58% of the business in a deal worth around £65m.
Interestingly, Richard Reed says he never dreamt of starting his own business as a kid, and that Innocent Drinks, was born from friendship rather than an entrepreneurial drive. He says, “I wanted to start a business with mates. I wouldn’t have had the confidence or the skills to do it by myself.” Many people have bucked at starting a business because of this challenge. The fear of failure and the necessary skill has prevented many people from starting a business, even after they have done their homework in terms of the business.
Their story goes that; their families liked the taste of their fruit smoothies, but in other to find out if enough other people would be prepared to pay for them, they decided to attend a jazz festival in London in 1998, they made a thousand bottles, then they setup a stall with the sign reading ‘Do you think we should give up our jobs to make these smoothies?’, then two bins were provided for the empty bottles – one labeled ‘yes’, the other ‘no’. At the end of the festival, the ‘yes’ bin was overflowing, while the other bin looked almost empty.’ The following week, they resigned from work.
This was the birth of their company, another major challenge they faced, was raising capital. Numerous banks and venture capitalist had refused to finance their business and with savings running out, they desperately emailed everyone they knew asking, ‘Do you know anyone rich?’ Eventually, they found a London-based American businessman who promised to find investors. He failed but then came up with the £250,000 out of his own pocket because he didn’t want to let them down.
Reed says it is essential that those starting a business keep faith in their idea. “When we set it up we were 90% sure that it wasn’t going to work. Then everyone said it definitely wasn’t going to work. When you think it’s a ‘no’ and you hear ‘no’ 1,000 times, you start to think it definitely isn’t going to work. We kept going because there was the three of us. And there was part of us saying, ‘Yes, but, some people do manage it, so if not us, then who?’ That’s the positive voice people should listen for.”
There was also the headache of what name to use, and many more, but from those challenging beginnings, Richard and his co-founders weathered the storm, 12 months into the business, they hit a turnover of a million pounds and five years in the business, they were on a profit of £1 million. They have grown the business turnover from £400,000 to £165m in 12 years and also witnessed the sale of 58% of the business to Coca cola for £65million, turning Richard Reed, his co-founders and their compassionate investor into millionaires.
Richard Reed says his best investment decision was investing his time and money in Innocent. He said after they quit their jobs, they had no cash – just one month’s salary each that they tried to eke out for two months. They each ran up debts of about £15,000 from overdrafts and credit cards. For the better part of 12 months, they had no income. It took them four years before they were back to earning £40,000 – the same salary they had left.
A comprehensive story can be found here